User-oriented product innovation - Some research findings

Successful product innovation requires information about user needs. The provision of such information is a question both of attitudes and methods. A number of leading companies in Europe, Japan and the U.S.A. demonstrate the importance of a market-oriented attitude and close contact with users. In-depth studies in Germany, Italy and Norway have revealed an array of tools that are available for the systematic assessment of existing and future needs.Most firms will benefit from a stronger market orientation. However, if one moves too far in this direction, societal needs may be neglected and technological opportunities missed. The aim should be a balanced orientation where the needs of all stakeholders are taken into consideration.     

Classification of commercial bank loans through policy capturing

The judgmental policy of a group of national bank examiners in classifying commercial bank loans was identified using stepwise multiple discriminant analyses and was expressed in the form of a linear model. Credit scenarios (which were composed of both financial and non-financial cues) were presented to 24 national bank examiners at the Office of the Comptroller of the Currency (OCC) in Washington D.C. Each examiner received 20 scenarios and was asked to classify the scenarios in one of the five classifications used by the OCC. Based upon 75% of these observations, a linear discriminant model was developed using stepwise MDA analyses. The remaining observations were used to validate the model developed. Non-financial variables appeared to be important discriminators; the financial variable of industry comparison of the interest coverage ratio using cash flow was an excellent discriminatory variable; and industry comparisons and trends of financial variables appeared to be more important than the variables themselves. The model developed contained two of these variables: (a) an industry comparison of the interest coverage ratio using cash flow and (b) the trend of the debt/equity ratio.     

An update on Bayesian updating

This paper reports an experiment in which subjects are asked to assess probabilities for unknown events, with treatments that vary the extremity of the prior information. Probabilities are elicited using a Becker–DeGroot–Marshak procedure that does not depend on assumptions about risk aversion. The focus is on the pattern of biases in information processing.